Litecoin’s price came under renewed selling pressure on Monday, dropping as much as 5% in the session and being forced to give up that key psychological $50 mark. A mass cooling in prices was seen across the board within the crypto market today. It’s worth noting that volumes substantially picked up, given the recent yearly low. They had been very much suppressed after the large volatility seen on 15th October.
Daily Chart Review
LTC/USD had been moving within a bearish pennant pattern formation since 13th August after quite a steep drop that was seen at the back end of July to early August. Litecoin had fallen a chunky 40% within three weeks, before then entering consolidation mode and gradually forming the mentioned pennant pattern. If going by the text book technical set up for a pennant pattern, after a downside move, typically it would suggest of further selling pressure vulnerabilities, as currently proving to be the case.
For going on six sessions now, Litecoin has closed on the daily in the red, demonstrating the amount of control the bears have a hold of LTC/USD. Despite appearing to be flat for most observers, Litecoin has still incurred a double-digit percentage loss within this period. The price in the session today – Monday – spiked to its lowest level in 7 weeks. On 12th September, LTC/USD fell to a low of $47.21, which then, was the lowest it had traded since September 2017.
A daily closure below the breached pennant pattern could be catastrophic. The door may be open for another wave of selling pressure, should this happen. In terms of support, eyes will firstly be on the mentioned 12th September low, $47.21. A failure to hold here, 2017 levels need to be observed again for further support areas. Demand was noteworthy running from $43-45 at the back end of August to late September of 2017, which proved to prop the price back up on several occasions.
Weekly Chart Review
Looking at the weekly chart view, it shows how devastating this technical set up could be for LTC/USD should momentum maintain its current course south. Searching for areas of support, eyes could be on sub-$40. A consolidation area between June-July 2017 around the $38 territory. Further south, the lower wick produced on 11th September 2017, at $32.96. Moves such as described, are all very likely to be dependent on this daily close.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
Featured image courtesy of Shutterstock.